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Wednesday, February 4, 2015

Obessed With Money?

There is a difference between obsessing about money and being careful with it.

On an online forum discussing personal finances, some commenter said, "Well, you're clearly obsessed with money!" The topic was spending on things like Starbucks, smart phones, or Cable TV and whatnot, and the commenter thought that it was "normal" to buy all these things - and that to not consume but to save instead was to be "obsessed" with money. An interesting thought.

I thought it was an interesting comment in that people such as her are actually more obsessed with money than people who are careful with it. And I can say this from experience.

When I was young and stupid with money (and I mean stupid) I ended up worrying about money constantly. I never had enough money in the bank, it seemed. I had little in the way of savings, and every month, it was a struggle to pay the bills and "make ends meet." Does any of this sound familiar? It is the whiny battle cry of the middle-class nationwide: "We are living paycheck-to-paycheck!"

And when I was young, I got into trouble with credit cards and other debts - and was late with payments or just not very astute about things in general. Like most poor people, I threw an untold amount of money on things like cars and beer and pot - but could never seem to understand why "everyone else was so rich" and why I was so poor.

And like most young people, I was convinced that the whole thing was a racket and that "other people" were getting rich, probably at my expense.

In other words, I was obsessed about money because I didn't have any.

There are others who pretend not to care about money but they obsess about it even more than the poor. They are not "obsessed with money" they say, because of course, they are better than that. And of course, that is a clear form of status-seeking behavior. And as we have learned here, seeking status is the one sure way to go broke in this country. That is what prompted them to buy the mini-mansion. It is what drives them to buy a Starbucks. Status.

Being astute with money isn't "obsessing" about it. It is being astute. It is being smart. Money, as I have pointed out before, is the greatest invention of mankind - an idea about the value of things, that allows us to operate as a civilization, a society, and a culture. We can launch rockets to the moon or build microchips, or do any other group effort involving thousands or millions of people, all without the amount of supervision such an effort would require, without money. Money allows a lot of markets to self-regulate, as once in a while, this "invisible hand" deal actually pans out and people - in a rare moment of lucidity - act rationally and make rational choices.

In fact, as we shall see, the main problem with money, is that people can be easily persuaded to make irrational choices with their money - and that is how some folks get ahead while the vast majority flounder.

And yea, money can be abused, the system can be abused, and some people profit "unfairly" in a money-based system. But more people profit unfairly in a barter-based system. And a barter-based system cannot, by its nature, rise about a subsistence level. We need money. End of story.

There are some "bad actors" in the world who rip people off, whether it is through stock manipulation, or some sort of illegal chicanery. But most of these cons require the consent of the conned. You can argue that Bernie Madoff was a bad person who stole people's money. But the people who willingly gave him their money never really asked where it was going or how he was able to make such a consistent high rate of return, without any risk. They also failed to diversify their portfolios and placed all their financial eggs in this one basket. In other words, they got greedy and it is hard to feel sorry for people who are greedy.

They were "obsessed about money" but they were not paying attention to it.

And that is the difference. What I am trying to discuss in this blog is not "obsessing" about money, but rather paying attention to it and how important it is to pay attention to money. After all, the money that passes through your hands in your lifetime, will easily total in the millions - even if you are a working-class Joe. It represents all the sweat of your brow, your labor, your effort - of which there is a finite amount. Eventually, you will not be able to work, and you will need that money to survive.

And if you really pay attention, well, you can then choose not to work if you want to, and let your money work for you.

Sadly, few people choose to pay attention to money. Like the commenter I noted above, they would rather just spend, indiscriminately on whatever new consumer purchase comes down the pike, and "have a good time" with their cash, and not pay attention to where it is all going. At the end of the month, they struggle to pay their bills and wonder where all the money went, and decry they are "living paycheck to paycheck!"

You have to pay attention to money. You have to respect it, as it represents not only your labor, but your freedom and independence.

The same commentator, also said, "well, I don't care about saving up for retirement! I'll never retire, I like to work, I'll always have to have some sort of job! I'll just work well into my 70's!"

And while she said this couched in terms of financial independence - and implied that anyone so gross as to actually save up their money and not have to work was somehow morally deficient - it really was a declaration of perpetual financial servitude. It is little more than celebrating the bling on your manacles.

And it is an easy declaration to make, when one is in their 20's and has never had a serious health crises in their lives. Life does not go on forever, and being healthy does not go on forever. It is a nice theory to say, "I will always work" but eventually there reaches a point where you can't work or they won't let you, and at that point, brave declarations about perpetual employment are shown to be hollow.

What is so odd to me, is that so many people are willing to sell themselves into slavery, one Starbucks at a time. It is not like saving money is "hard" to do - you need only find a small area in your life where you can economize. Put aside $5 a day and before long you'll have a quarter-million in the bank. It just takes time and effort. And it requires budgeting - paying attention to money - instead of just spending it, willy-nilly. It isn't rocket science.

But it does require paying attention to money and if one likens this to being "obsessive" then there is little hope of ever getting ahead.